Some financial mistakes are easier to recover from than others. Failing to properly plan for retirement falls into the not-so-easy camp. And yet, the latest in a long series of retirement preparedness studies indicates that many working age households in the U.S. are making this very mistake.

This new study, prepared by the Center for Retirement Research (CRR) at Boston College, analyzed two key findings. First, it compared people’s objectively measured, actual retirement preparedness with their perceived preparedness. And second, instead of just highlighting how many people are less prepared than they think (a common finding among retirement studies), it also found that some people are actually more prepared than they realize, causing needless worry.

Let’s break it down.

Over half are not well prepared

According to the CRR study, over half (52 percent) of working age households are at risk of not being able to maintain their current standard of living in retirement. That’s even if these households work until age 65, annuitize all of their financial assets, and turn their home equity into an income stream via a reverse mortgage.

In 1989, just 30 percent of households were deemed to be at risk. The study’s authors attribute the growth in this number to three main factors:

  • The increased time people are spending in retirement — the result of a fairly static average retirement age (around 63) combined with lengthening life spans.
  • Increases in Medicare premiums.
  • The sweeping change from defined-benefit to defined-contribution retirement plans, such as 401(k) plans. In managing their own retirement accounts, the authors said, “individuals make mistakes at every step along the way,” which has resulted in a woefully inadequate median retirement account balance of just $111,000 for households nearing retirement.

Over half of the unprepared don’t realize it

Of the 52 percent of households that are at risk of…